If barbers in Mexico are just a productive as their counterparts in the United States then why do they earn lower wages?
What will be an ideal response?
The reason is that productivity alone does not determine earnings. Productivity times the price that consumers are willing to pay does. This is what is referred to as the marginal revenue product. In Mexico the ability and willingness to pay for a haircut is lower than it is in the United States. That translates into a lower marginal revenue product and lower wages as well.
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The table above shows some of the costs for a perfectly competitive firm. The firm will produce 9 units of output if the price per unit is
A) $1750. B) $200. C) $300. D) $500.
In the example of coordination problems between Google and Motorola Mobility, one method to solve the problems was
A) to undertake a merger or acquisition. B) form a joint venture. C) for one firm to subcontract with the other. D) All of the above.